By Steve Rhodes
LATE UPDATE: See the end of the column for an internal Sun-Times memo and a Tribune Co. press release about TribCo’s bankruptcy filing.
*
Maybe Chicago is the center of the world right now. And not just because GQ (ugh) and Lonely Planet have named us their favorites.
Consider:
* The sit-in by workers at Republic Windows and Doors is more than one of the first labor actions of the new economic era; it’s already a national symbol of the economic times.
* In a further sign of overextended debt and an industry even dumber than automakers, the Tribune Co. is considering filing for bankruptcy protection. A wave of other media companies – including the Sun-Times Media Group – could follow.
* We have our own entrant in hedge fund madness.
* Our mayor is selling off our assets in order to balance his budget.
And somehow it seems fitting that it’s almost certain we’re going to send our second consecutive governor to jail even while our political power structure now occupies the White House. (The cherry on top is Todd Stroger addressing the Council of Governmental Ethics Laws this morning).
In other words, America is playing itself out right here in Chicago. In many ways, we have a front-row seat.
Slick Luis
“When U.S. Rep. Luis Gutierrez was looking to buy in the sizzling Bucktown real estate market, he teamed up with a developer and longtime political donor who sold him a plot of land and built him a new home,” the Tribune reports in the latest installment of its “Neighborhoods For Sale” series.
“And when the congressman decided not to move into the home, the developer, Krzysztof Karbowski, was there to buy it back.
“Gutierrez walked away with nearly $200,000.”
Trib Turmoil
“Tribune is in danger of falling below the cash flow required under its agreement with its bondholders, but it is not clear how seriously Tribune is thinking about seeking bankruptcy protection,” the New York Times reports.
The Sun-Times notes that “The reports could be part of a negotiating strategy with Wall Street lenders.”
That’s my suspicion, but I have nothing but instinct to base that on.
UPDATE 1:20 P.M.: TRIB FILES FOR BANKRUPTCY
*
By the way, I’m not linking to the S-T story because the paper’s website has frozen my browser nearly every time I’ve gone to it for the last week. Is anyone else having this problem? I use Firefox on an iBookG4.
Lyric Laundry
So a bunch of TV folks singing for charity ended their night with Don Henley’s “Dirty Laundry.” What fun!
It just goes to show that you can sing along and still not really think about the words.
The Political Odds
Who will replace Barack Obama in the U.S. Senate? Who will replace Rahm Emanuel in the U.S. House? Will Richard M. Daley ever got to prison, and if so, will he get his prison sentence commuted? Find out in The Political Odds.
Bear Report
“[T]he Jaguars simply weren’t good enough on Sunday to make the game matter,” our very own Jim Coffman writes in SportsMonday. “We’ll know so much more about the genuineness of [the Bears’] playoff aspirations in only a few more days.”
Smoke Joke
So Barack Obama still hasn’t quite quit smoking yet, the Sun-Times reports.
Coming Tuesday: What Does Obama Smoke? The Inside Story.
How he holds his cigarette. How he blows out his smoke. How to smoke what he smokes how he smokes when he smokes.
Plus, an interactive map of an Obama smoking tour of Chicago. His favorite places to smoke!
Movie Tone
Roger Ebert has compiled his Top 10 list for 2008, except that this year it’s a Top 20 list. But most interesting is this:
“Looking back over the list, I think most moviegoers will have heard of only about 11, because distribution has reached such a dismal state. I wrote to a reader about Shotgun Stories, ‘I don’t know if it will play in your town.’ She wrote back, ‘How about my state?’
“This is a time when home video, Netflix and the good movie channels come to the rescue. My theory that you should see a movie on a big screen is sound, but utopian.”
Outback Payback
“I went to Australia, despite my dislike of Luhrmann’s oeuvre, because I felt his new movie shouldn’t have to apologise for what it is – an oversized, rollicking, self-consciously absurd spin on outback mythology,” writes our very own Rod Heath of Lithgow, Australia, at Ferdy on Films. “There was opportunity there to look at how far the cinema culture has come from the moronic Man from Snowy River (1982) and the other exercises in two-dimensional historicism. And yet I felt finally sickened by Australia, a film which tries far, far too hard, and proves that rather than having an ironic glint in its eye and a magician’s touch to its spectacle, it’s pure, unadorned, interminable, elephantine kitsch.”
News Bites
“Bush at Army-Navy Game.”
Both teams lose.
“Sarkozy meets Dalai Lama.”
So I’m on the first tee with him . . .
“Don’t shoplift for Christmas.”
By then it’ll be too late. Start now.
Angry Republic Workers
–
The Beachwood Tip Line: Not Safe For Work.
–
UPDATE/MEMO 6 P.M.: The publisher of the Sun-Times weighs in on the Tribune Co.’s bankruptcy filing.
*
December 8, 2008
Dear Sun-Times Media Group colleagues:
Today the Tribune Co., which owns the Chicago Tribune and other print and broadcast outlets, announced that it filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. There may be some confusion as to what this means for them, and for us. I hope this note will answer some of your questions.
The Tribune Co. has voluntarily filed to reorganize its business. Such a filing offers a way for a company to work with its creditors and vendors while management continues to run day-to-day business operations – in other words, it can give a company facing a tough financial situation some breathing room. In a press release today, the Tribune Co. said it filed because of “a precipitous decline in revenue and a tough economy coupled with a credit crisis that makes it extremely difficult to support out debt.”
This does not mean the company or its newspapers or broadcast outlets are going out of business. The purpose of a Chapter 11 filing typically is to allow a company to reorganize with the goal of emerging as a viable, profitable business. The Tribune Co. said today that there will be no interruption to its day-to-day operations, including publishing its newspapers. It also said that its Chicago Cubs franchise, including Wrigley Field, is not included in the Chapter 11 filing and that it will continue its previously announced efforts to sell the team.
We do not expect this filing to affect our distribution agreement with the Tribune. As you know, we signed a long-term contract with Chicago Tribune Co. last year to handle most of our Chicago Sun-Times and suburban newspaper delivery. Chicago Tribune Co. is bound by a legal contract to distribute most of our newspapers, and we expect that to continue without interruption.
Sun-Times Media Group, as you well know, has faced difficult financial challenges in recent years, including the current tough print advertising environment. We continue to work toward stabilizing our operations and managing our costs during what has emerged as the most financially challenging period in the news industry’s history. We are committed to remaining the Chicago area’s best source of news and information, and we must stay focused on that goal. We are launching our second major wave of cost reductions early next year as part of the expense reduction plan of $45 million to $55 million we announced to our shareholders in November. Our goal, as we have previously said, is to be cash flow neutral while preparing for a future economic rebound.
One of the great aspects about Chicago is that it has been served by two major dailies for years. We believe it is good for readers and advertisers for Chicago to continue to be a two-newspaper town, with our strong suburban titles delivering the local news and information our suburban customers want. The Chicago Tribune is a good competitor and we look forward to competing with them in the future.
Cyrus Freidheim
UPDATE: 6:30 P.M.: Here is the Tribune Co.’s press release from earlier today.
TRIBUNE COMPANY PRESS RELEASE
December 8, 2008
Tribune Company to Voluntarily Restructure Debt Under Chapter 11
* Publishing, Interactive and Broadcasting Businesses to Continue Operations
* Chicago Cubs and Wrigley Field Not Part of Chapter 11 Filing;
Monetization Efforts to Continue
CHICAGO, Dec. 8, 2008 — Tribune Company today announced that it is voluntarily restructuring its debt obligations under the protection of Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The company will continue to operate its media businesses during the restructuring, including publishing its newspapers and running its television stations and interactive properties without interruption, and has sufficient cash to do so.
The Chicago Cubs franchise, including Wrigley Field, is not included in the Chapter 11 filing. Efforts to monetize the Cubs and its related assets will continue.
“Over the last year, we have made significant progress internally on transitioning Tribune into an entrepreneurial company that pursues innovation and stronger ways of serving our customers,” said Sam Zell, chairman and CEO of Tribune. “Unfortunately, at the same time, factors beyond our control have created a perfect storm – a precipitous decline in revenue and a tough economy coupled with credit crisis that makes it extremely difficult to support our debt.
“We believe that this restructuring will bring the level of our debt in line with current economic realities, and will take pressure off our operations, so we can continue to work toward our vision of creating a sustainable, cutting-edge media company that is valued by our readers, viewers, and advertisers, and plays a vital role in the communities we serve. This restructuring focuses on our debt, not on our operations.”
The company filed today for Court approval of various, customary First-Day Motions, including: maintaining employee payroll and health benefits; the fulfillment of certain pre-filing obligations; the continuation of the Tribune’s cash management system; the ability to honor all customer programs. The company anticipates its First-Day Motions will be approved in the next few days.
While the company has sufficient cash to continue operations, to supplement its cash availability in the event of even more significant declines in its operating results, the company has negotiated an agreement with Barclays to maintain post-filing its existing securitization facility. Barclays has also agreed to provide a letter of credit facility. The company expects to submit these agreements to the Court for approval as part of its First Day Motions.
Since going private last year, Tribune has re-paid approximately $1 billion of its senior credit facility.
During this time, the company has been rewriting the business model for its media assets with the goal of
building a sustainable, innovative, competitive company that provides relevant products for its customers and communities.
For further information on Tribune Company’s Chapter 11 filing, please visit Tribune.com or
http://chapter11.epiqsystems.com/tribune.
Posted on December 8, 2008